KWASI Kwarteng has once again defended his mini-budget after the International Monetary Fund criticised the UK Government’s tax-cutting plans.
The IMF said that the Chancellor’s unfunded tax cuts had made the Bank of England’s ability to keep down inflation more difficult.
In its prestigious, twice-yearly World Economic Outlook the fund also criticised the scale of the stimulus provided with regard to energy bills and noted that UK inflation will be the highest in the G7 by the end of 2023.
The outlook added that in the eurozone only Slovakia would have a higher inflation rate by the end of next year and laid the blame on Kwasi Kwarteng.
However, despite this latest criticism, a spokesperson for the Prime Minister defended the plans.
They said: “I think the Government puts in place policies to support British people at a time of global high prices.
“That’s why we think it’s right to step back from the highest tax burden in 70 years and ensure the public can keep all of the money they earn.
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“But look, I think the IMF projections set out global challenges that countries are facing”.
They noted that the UK economy is projected to grow at a rate of 3.6% in 2022 and 0.3% in 2023.
“Obviously these projections were prepared before the announcement of the growth plan and the energy price guarantee, so don’t reflect the impact of our fiscal measures,” they said, adding that the Government’s plan will “lift growth projections”.
During an exchange in Parliament Kwarteng said that his financial statement on October 31 “will be relentlessly upbeat” but with an “iron commitment to fiscal responsibility.”
However, the SNP pointed out that this is the second time the IMF have criticised the UK Government’s handling of the economy.
SNP shadow chancellor Alison Thewliss MP said: “The latest criticism from the IMF over the Tory government’s disastrous budget is damning.
"It's unacceptable that rather than heeding the warnings and acting to properly support households and businesses, the UK government instead simply buried its head deeper into the sand.
“With warnings mounting each day over the real threat to people’s incomes, pensions and homes, it’s clear that only with independence will we be able to escape harmful Westminster control and get rid of the Tories for good.
"The reality is that whether it is the Tories or Labour, Scotland will be forced to pay a heavy price as a result of an extreme Brexit and another round of deep austerity cuts under Westminster.
"Independence is the only route to keep Scotland and our economy safe, and build a fairer and more equal society."
Pierre-Olivier Gourinchas, chief economist of the International Monetary Fund, also warned other countries not to follow the UK’s example, unless they wish to stoke further “financial instability”.
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